TipTop Flight School offers flying lessons at a small municipal airport. The school's owner and manager has been attempting to evaluate performance and control costs using a variance report that compares the planning budget to actual results. A recent variance report appears below: TipTop Flight School Variance Report For the Month Ended July 31 Lessons ok Revenue Expenses: Instructor wages ences Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Total expense Net operating income Actual Results 210 $ 54,370 Planning Budget 205 $53,300 Variances $ 1,070 F 15,550 15,375 175 U 6,720 6,560 160 U 4,155 3,485 670 U 3,705 3,530 175 U 2,605 2,615 10 F 3,798 3,930 140 F 36,525 35,495 1,030 U $ 17,845 $ 17,805 $ 40 F After several months of using these reports, the owner has become frustrated. For example, she is quite confident that instructor wages were very tightly controlled in July, but the report shows an unfavorable variance. The planning budget was developed using the following formulas, where q is the number of lessons sold: Revenue Instructor wages Aircraft depreciation Fuel Maintenance Ground facility expenses Administration Cost Formulas $260q $750 $320 $179 $660 +$140 $2,000 +$30 $3,520 + $20